Dewey liquidation plan wins court approval

Nearly nine months to the day after it filed for bankruptcy, the defunct law firm Dewey & LeBoeuf has won court approval for its liquidation plan.

Dewey’s troubles began early last year, as one partner after another departed amid rumors of financial trouble and compensation disputes. The collapse was made official on May 28, 2012, when the firm finally filed for Chapter 11 bankruptcy protection.

At the time, the firm reportedly owed upwards of $550 million to creditors, but its estate was quickly able to chip away at that total when it reached a $71 million clawback settlement with about 400 of its former partners last October. Under the terms of that deal, the ex-partners agreed to return between $5,000 and $3.5 million of their compensation in return for immunity from all future lawsuits connected with Dewey’s demise.

Earlier this month, the firm finally reached a settlement with a holdout group of retirees who had filed an $80 million lawsuit seeking unpaid pension benefits and compensation from the firm. Instead, many of these ex-partners have now agreed to their own clawback settlement with their former employer.

Several of Dewey’s top executives—notably former chairman Steven Davis, former executive director Stephen DiCarmine and former chief financial officer Joel Sanders—are still facing litigation over claims that they mismanaged the firm into bankruptcy.

Despite all the ups and downs, Dewey’s liquidation process has actually proved relatively speedy compared to other law firm bankruptcies, which have sometimes lasted for years, the Wall Street Journal Law Blog notes.

Judge Martin Glenn himself expressed his approval of the firm’s winddown process on Wednesday. “The court is very pleased,” Glenn said. “I want to congratulate all the professionals.”

For more InsideCounsel coverage of the Dewey & LeBoeuf bankruptcy, see: